Cellnex holds firm on 2021 outlook

Expansionist European tower company Cellnex, based in Spain, is sticking to its outlook guns.

On presenting a fairly robust set of Q3 results, Cellnex said it was "on track" to achieve a 65% FY 2021 increase in adjusted EBITDA, year-on-year. On the RLFCF metric – recurring levered free cash flow – Cellnex is still expecting a 60% year-on-year hike when comparing 2021 with the previous year.

During Q3, Cellnex managed to boost adjusted EBITDA by 70%, year-on-year, to €531 million (US$615 million). As for RLFCF, that was up 60%, to €266 million ($308 million), compared with Q3 2020.

Figure 1: Europe's largest independent tower company posts solid Q3 and reiterates full-year guidance.
(Source: REUTERS / Alamy Stock Photo)

Reflecting on the nine-month period to September 30, which Cellnex described as marking the conclusion of "several transformative acquisitions and initiatives" announced in 2020 and in 2021 – this includes new agreements in France (Hivory), the Netherlands (sites from Deutsche Telekom), Poland (Polkomtel Infrastruktura) and Portugal (through an expanded partnership with MEO) – Cellnex CEO Tobias Martínez painted a bright picture.

"These inorganic growth opportunities, coupled with achieving an organic growth in excess of 6%, provides a dynamic that is reflected in an improvement of the key indicators of revenue, EBITDA and recurring cash flow," he said in a prepared statement.

"This allows us to confirm our outlook for the year of the review that we announced at the end of the first half, with revenues in excess of €2,500 million and an EBITDA of over €1,900 million."

Expansion, expansion, expansion

The most recent Cellnex acquisition was agreed this week in France, where it got the green light from the French Competition Authority to acquire Hivory, which manages 10,500 sites (mainly for SFR, Altice France and Starlight Holdco).

The deal will cost Cellnex €5.2 billion ($6 billion), which will be accompanied by an eight-year investment program worth a further €900 million ($1 billion), including rollout of up to 2,500 new sites. The approval by the French Competition Authority is contingent on Cellnex divesting around 3,200 rooftops.

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Cellnex plans to control around 130,000 masts in Europe by 2030, once all the announced acquisitions are finalized. The portfolio could eventually reach 200,000 sites, said Martínez on the company's Q3 earnings conference call – as reported by Reuters – through new acquisitions and catering for 5G demand. He did not give a timeline as to when this higher site count might be achieved, however.

Given its acquisitive disposition and the associated integration costs this incurs, net debt – perhaps inevitably – has shot up. As of September 30, Cellnex was staring down a net debt level of €8.6 billion ($10 billion), up from €6.5 billion ($7.5 billion) nine months earlier.

The level of net debt, however, seems well within Cellnex's financial comfort zone. As of September 30, Cellnex had liquidity – cash and undrawn debt – amounting to €14.3 billion ($16.6 billion).

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— Ken Wieland, contributing editor, special to Light Reading